Rainbow Rare Earths Ltd. said Aug. 8 that it entered into an agreement to form a joint venture with Tech Metal Co. Ltd. to conduct a definitive feasibility study on establishing a rare earth processing and separation business for concentrate from its Gakara project in Burundi.

Under the agreement, TechMet fund the full costs of the definitive feasibility study for up to US$3 million. It will also subscribe for US$500,000 of Rainbow's new shares.

Rainbow also launched a placement of new shares at not less than 12 pence per share to raise another US$1.5 million.

"The proceeds from the combined capital raising will be directed towards the near term development of our second mining area, Murambi, that is due to start production later this year, but also be used for exploration and development at Gomvyi, a very promising potential third mining area and for strengthening Rainbow's working capital," CEO Martin Eales said.